JOINT COMMITTEE ON SOCIAL AND FAMILY AFFAIRS debate -
Tuesday, 13 Feb 2007

Introduction of Swipe Cards: Discussion with Department of Social and Family Affairs.

Chairman

I welcome before the joint committee Ms Bernadette Lacey, director general, Ms Vera Dervan, director and Mr. Darragh O'Connor and Mr. Tony Kieran, principal officers, of the Department of Social and Family Affairs, some of whom are familiar to members. Before hearing from the witnesses, I remind members of the parliamentary practice that members should not comment on, criticise or make charges against any person outside the Houses or an official either by name or in such a way as to make him or her identifiable. Members who wish to make a declaration in respect of any matter being discussed may do so now or at the beginning of their contribution. Members are also reminded that if there is a possibility of a conflict of interest, they should make a declaration of interest either now or at the start of their contribution.

I draw attention to the fact that while members of the committee have absolute privilege, the same privilege does not apply to witnesses appearing before the committee. While it is generally accepted that witnesses would have qualified privilege, the committee is not in a position to guarantee any level of privilege to witnesses appearing before it.

I invite Ms Lacey to make some opening remarks, after which I will open the floor to members for questions.

Ms Bernadette Lacey

I thank the Chairman for the opportunity to address the joint committee. I apologise in advance as I have a cold and may dry up.

Chairman

We are all suffering and empathise with you.

Ms Lacey

I thank the Chairman. While members will have received a note in advance on the Department's position on this topic, I will cover some of the highlights. The issue has been raised because of the replacement of the personalised payable orders, PPOs, by a swipe card for payment of certain social welfare benefits, particularly the lone parent payments, which will go into operation from 16 February. The joint committee has raised a couple of issues about the scheme, particularly as it applies to widows and widowers, in respect of the change itself and the deadline for collections.

The Department has two objectives in changing the payments, namely, to improve customer service and to address issues of control and access to payments. In terms of customer service, our intention is to provide one-parent family payments from our local offices. Traditionally, payments have been made from a central source. One-parent family claimants will have the opportunity to meet with local staff, to gain additional information on their entitlements and to have opportunities to access or resume participation in the employment market where possible.

The use of swipe cards in local offices facilitates the Department and the customers in implementing changes that arise during the course of a person's claim. If a lone parent changes address, has additional children and so on, it is necessary for the book to be returned to the Department for cancellation and for a new book to be issued. This takes time to implement, but under the new scheme, new payment arrangements will be implemented overnight or within a few days of the person notifying the Department of the change.

Some 83,000 people receive one-parent family payments, approximately 850 of whom are widowed. As such, the number who will gain from the change in the process is currently small, but we will examine whether to extend the system of payments to other areas. In excess of 54,000 one-parent family customers are paid via the electronic information transfer system, EIT, in post offices. The payment is valid for 12 days. If it is not collected in that time, it is cancelled and returned to the Department. Given that it is a means-based payment, this is an appropriate length of time. However, if illnesses or other commitments are issues, arrangements can be made to re-issue the payments relatively simply.

Of the 850 widowed persons in receipt of the payment, 580 are paid by book at post offices and will change their payment methods. Just under 80 of those people are paid via EIT and the social welfare services card at post offices. Of the 580, more than 190 are paid by electronic funds transfers to their bank accounts. The Department uses different payment methods to offer customers the most suitable option for them. It is not a matter of us imposing a method on a customer. Currently, most payments issue through post offices. The change to a new method will make things easier for the Department and the customer in terms of various changes arising during the payment of the latter's claim. It will eliminate the considerable processing involved in preparing and issuing books in light of budget changes or book renewals. At present, the process begins up to six months in advance of the date on which the book is issued. Changes introduced in the budget, for example, are always delayed for people on the PPO system, whereas it will be possible under the new EIT system to make budget increases to one-parent family payments from the beginning of January.

The other advantage of paying customers through the post office and using the EIT system is that we have a household budgeting system in place which enables people to have a certain sum deducted from their payments each week to pay bills, such as rent and utilities. The Money Advice and Budgeting Service has commended the Department on that facility and is keen to see it extended to lone parents who often face difficulties in managing their bills.

I have outlined the background to the changes being introduced by the Department. I remind members that the approach we are adopting of e-payments is in line with Government policy.

Deputy Stanton

I welcome Ms Lacey and her officials before the committee. The 12-day period seems to be giving rise to questions. Ms Lacey stated that it is appropriate to return means-based payments to the Department if the money is not taken within 12 days. What is the current deadline? I understand it is longer than 12 days.

Ms Lacey

The time allowed for book payments has been as long as 12 weeks.

Deputy Stanton

Is there any reason for reducing the timeframe to 12 days? Does the Department encourage electronic funds transfers over other methods? Does Ms Lacey believe that all payments will eventually be made by electronic funds transfers, EFT, and, if so, can we be sure there will be no repeat of this week's announcement by the Minister of a windfall payment for State pensioners of €234 because of the delay in issuing books? If everybody moves to EIT, will such delays disappear so that people can be paid by early January? How often are the cards renewed and do they contain expiry dates? Is the recipient of a payment given a receipt? Books have built-in receipts, so people can see exactly how much they are paid.

Concerns have been expressed about the potential for fraud in electronic funds transfers and there have been recent reports of people who continued to draw payments after leaving the country. I am aware, however, that the problem is difficult to manage and that the Department is doing its utmost. We have had discussions with officials on the matter in the past.

Will a saving to the Department result from transferring to EIT and, if so, can Ms Lacey estimate the amount involved? Is there a way to identify a person who might use one of these cards? Will anybody be able to walk in with a card or will the usual safeguards apply? Is there an intention to use these cards for any other purpose, such as payments in other schemes or other services of the Department or other Departments?

Ms Lacey

I will try to answer all the questions. There are two issues around the 12-day stipulation. The post office would currently hold a file of electronic transactions relating to payments and if people do not make collections, they are held on a holding file, depending on the number of weeks left. There would be an issue of how much of this could be managed, as we do not just pay lone parents. We also make unemployment payments, along with others, via EIT, and that issue will be addressed over time.

We are constantly examining the controls we have in place over various payment types. Given that a means-based payment is for somebody who is dependent on social welfare payments, we would consider that somebody who receives a means-based payment would require it within 12 days. The existence of a longer period is historically related to how fast books could be turned around if the payment was withdrawn. It is a different issue but an opportunity for us to impose a control system that is more rigorous and suited to the nature of the payment.

Another question concerned whether we promoted EFT over other methods. We do not promote one method over any other but we offer the choice to customers vis-à-vis the bank or the post office. There has been some perception that we have pushed the EFT rather than the post office payment, but this mainly concerns the fact that all payments traditionally went through the post office. Any highlighting of alternative payments would be seen as promoting one over the other, which we do not do. It would not be right for us to do so. We intend to go the electronic route with all payments in the long term over a period of years. We will move to either EFT or EIT, which will be better for the customer as well as ourselves.

The Deputy asked about the windfall payment. The intention is that all going well, the changes for electronic payment method can be introduced by 1 January. That is one of the benefits of changing to EIT.

With regard to the issue of how often cards are renewed, we have not traditionally had an expiry date. Once they were issued, they stayed in operation. However, we are currently examining the issue of a social security, or public service, card and how this might be operated. One factor we are considering is an expiry and renewal date, as the card will be used for a wider range of services than just those relating to social security.

With regard to whether people receive a receipt, a chit is printed out for people, similar to that issued with a credit card. EFT fraud is a significant issue for us as people are now more mobile and could leave the country without our knowledge. We are trying to implement new approaches and changes to address the issues. With EIT, the person would have to turn up at the post office with the card, so it would not have the same impact.

With regard to cost savings if we move from PPO books to EIT, the cost for us of payment to the post office is the same per transaction. The savings would be in the cost of producing the books.

With regard to the identity of the person concerned, I am sure members have seen the current cards, which do not have a picture. We are addressing the issue of the public service card. When a person swipes the card, he or she must sign the chit and the signature is matched against that on the card. Someone who had faked a card would also have to make a fake claim. There are controls in the process.

Acting Chairman (Deputy Carty)

Before I call on Senator Terry, I have a question. Ms Lacey said arrangements were made for a payment to be reissued as soon as possible in the case of illness, work commitments, holidays and so on. How long does she envisage this period to be?

Ms Lacey

If an individual notifies us that he or she has not collected the payment for one of the reasons mentioned, the payment can be made within a matter of days.

Acting Chairman

Days.

Ms Lacey

We would normally replace the payment by cheque.

Acting Chairman

It would not go on for six weeks.

Ms Lacey

No. It would be within the same week.

Acting Chairman

That is where public representatives would become interested. We would be knocking on the door, wondering.

Ms Lacey

I am sure you would, Chairman.

Acting Chairman

I welcome the household budgeting facility. It is good that An Post can pay a regular amount to certain households. That is a positive step.

Senator Terry

I thank the officials for coming to this meeting. Deputy Stanton has asked most of the important questions. I can understand that, as this is a means-based payment, it will always be collected within the designated time, except in exceptional circumstances. Even people on low incomes or in receipt of a means-tested payment are entitled to go on holiday, if only to visit a relative. Therefore, there will be occasions when they will not be able to collect their payments. Is there a facility to let the Department know in advance that a person will not be able to collect the payment? There must be some system, whereby, once or twice a year, people can inform the Department that they will not be able to collect their payments within 12 days. Must an individual collect his or her payment at a designated post office or can it be collected at any post office?

Ms Lacey

If someone notifies us that he or she has been away on holiday, we can reissue the payment. A system of taking notification in advance would be hugely complex. People go back and forth. It would be necessary to put stops on payments and withdraw them when a person has come back, or for the post office to hold the payment. It would be more complex than the current system which is reasonable because the payment will be restored to the person within a day or two of our being informed. Customers are given a designated post office where they collect their payments. Payments are transmitted to that post office for collection.

Senator Terry

Does that do away with fraud perpetrated by people who have left the country? Each customer must present himself or herself at the designated post office to collect the payment.

Ms Lacey

It does. We are moving people away from the personalised payable order books. An individual with a PPO book is, in theory, supposed to turn up to have it cashed. The new system is probably more secure in that the card with the person's signature must be presented. The person concerned must turn up at the post office and sign. That reduces the potential for fraud, which in respect of somebody using the EIT system is much less than in the bank at which the use of EFT offers people an opportunity of collecting payments while out of the country. We are dealing with that issue separately.

Deputy O’Connor

I welcome the delegation. We are sometimes reluctant to welcome change, but we all welcome progress. Having grown up in a bygone era, one often wonders how one's granny would have reacted to the introduction of the new EIT system. I have no problem with it, but how is it intended to ensure it does not frighten people? There are jokes to the effect that some elderly people said they would not deal in the euro, that it was not for them. I am not being flippant. I am quite serious when I say such changes can be profound for people of a certain age. I want to be sure the Department will do everything possible to ensure there will be no problems in that regard.

Whenever we have debates on social welfare issues, I always compliment the Department because its response to queries is far better than that of any other Department. The Department of Social and Family Affairs does a good job when it comes to communications. It is important that, in introducing this new system, it continues to communicate, to get the information out and to ensure at every level that people understand what is involved. I welcome what it is doing but I want to make sure everybody is happy about it.

Ms Lacey

We have taken a very measured approach to introducing electronic payments for our customers. We have been tip-toeing into this area for the past ten or 15 years and focus mainly on the working age population. This is addressed to the lone parent group, the vast majority of whom are of working age and most of whom are experienced in using cards of some kind. Our measured approach has succeeded to date. We are very conscious of the need to address the concerns of customers. The introduction of the new EIT system has been widely publicised. An Post offers an excellent service to our customers who will be going into the post office with their cards where the postmasters and postmistresses are experienced in the process, having used it for the past ten years or so in dealing with unemployed customers. They will be able to help people through the process. The problem of people being confused or concerned is ameliorated by the combined approach of the Department and An Post.

I am conscious that, as we move other age groups into the system, particularly older age groups, we will need to take a different approach. We generally meet the representative groups of different customers such as lone parents, pensioners and so on to see how we can best address their concerns. I am reasonably confident this will go very smoothly. It has been our experience where we have introduced electronic payments for customers that in the long term customers prefer it.

Deputy Stanton

It is probably neater than a book which can become grubby.

I have a couple of questions. Where a customer has been unable to collect the payment, is it stopped until he or she appears again and asks for it to be reissued? Will Ms Lacey talk us through the procedure? Are cards damaged or broken? If so, what is the process for re-issuing them?

Ms Lacey stated that 54,531 family payments are being issued. I presume the 12-day limit also applies in that regard. I was struck by her statement that the payment was means-based and that generally people collected it because they needed the money. If they need the payment and will receive it anyway, why apply the 12-day limit?

Ms Lacey

Perhaps the Deputy could repeat his final question.

Deputy Stanton

The director general stated that the payment was means-based and that people needed to collect the payment because they needed the money. The question then arises as to why one needs to impose the 12 day limit if those involved need the money. How many of the 54,000 in receipt of the one parent family payment ask for an extension of the 12-day limit?

Ms Lacey

We are in the process of moving the 54,000 people mentioned to the new system. We would not like to operate from a position where no limit applied.

Deputy Stanton

A period of 12 weeks was mentioned.

Ms Lacey

Yes, but that traditionally related to the enormous processing involved in reinstating payments. As I said, the payment is means-based and one would expect people in receipt of such payments to collect them within 12 days. If that does not happen, we are then required to ask how a person in receipt of a means-based payment is in a position to live for more than two weeks without the payment. We are trying to achieve a reasonable balance which will allow some leeway during the period in which the payment is due. Questions arise in regard to those who do not collect payments within two weeks.

The issue of cards being broken was raised. It is most unusual for cards to be broken, although they are often lost. Those who use them for payments are more inclined to take care of them and not lose them. They would take the same level of care with their cards as would those of us who use bank or credit cards.

On the reinstatement of a payment, the individual involved is required to contact the Department.

Deputy Stanton

Where a person does not collect a payment on the due date or within the 12 day period, is such payment automatically stopped until reactivated by him or her?

Ms Lacey

Is the Deputy asking if the payment is backdated?

Deputy Stanton

No. If a person does not collect a payment within the 12-day period, is the payment automatically stopped?

Ms Lacey

Yes.

Deputy Stanton

Must the person then seek to have it reinstated?

Ms Lacey

Yes.

Deputy Stanton

Does the 12-day limit apply in respect of any other payment?

Ms Lacey

It applies in respect of unemployment payments.

Mr. Tony Kiernan

A five day time limit applies in respect of unemployment payments.

Deputy Stanton

To unemployment assistance payments.

Ms Lacey

Yes.

Mr. Kiernan

The 12-day limit in respect of the one parent family payment took effect in February 2006.

Senator Terry

If a person does not collect a payment within 12 days, does he or she lose it?

Ms Lacey

No. If the person contacts the Department with a reasonable explanation, the payment will be reinstated within a day or so.

Senator Terry

Previously people had 12 weeks to collect a payment. In how many cases were payments not collected within 12 weeks?

Ms Lacey

I do not have that information but will obtain it for the Senator.

Senator Terry

It would be interesting for us to know how many did not collect within the time period, as well as how much time people allowed to elapse before they collected their payment. If Ms Lacey could tell the committee how many collected after two or four weeks, for example, we could establish how we could change habits to ensure people collect their payments.

Ms Lacey

We will attempt to get that information but it will not be easy, as it involves book returns and single orders. On the number affected, we have concerns about the number who do not collect the payment within the 12-week period and their need for a means based social welfare payment. It represents an opportunity to apply better control over payments.

Deputy Stanton

That is the second time Ms Lacey has used the word "control". When I hear it being used in respect of persons who must survive on a means-tested payment, I become concerned. If someone living alone has the misfortune to be ill for a prolonged period and is unable to visit a post office to collect the payment, is it stopped? Must he or she then contact the Department when he or she recovers to get the payment back? In such circumstances 12 days represents a very short time.

Ms Lacey

Anyone who faces difficulties in collecting a payment through illness or otherwise may nominate an agent. That would address the circumstances to which the Deputy referred.

Deputy Stanton

Do the same conditions apply to the one-parent family payment which has been in place since February 2006? How many have requested an extension?

Mr. Darragh O’Connor

We will struggle to answer the question on the 12-week period, but I hope I can revert to the Deputy on the number who missed the 12-day period and subsequently applied to have the payment period extended.

Deputy Stanton

While I agree that it raises questions if someone who appears to need it fails to collect a payment within two or three weeks, the proper response should be to send an official to investigate rather than to stop the payment. The 12-day period seems short in the context of illness, work commitments or holidays. I suggest the period be extended to at least three weeks.

Ms Lacey

The idea of extending it raises certain concerns. If a person is ill and has a difficulty in collecting the payment, he or she can nominate an agent or request payment to be made directly by cheque. We would not be able to cope in the Department if we were required to send someone out to investigate every time a person missed the 12-day deadline.

Deputy Stanton

It would not be every time, but every so often.

Ms Lacey

The numbers would simply be too great.

Acting Chairman

I thank the officials for attending at such short notice. The committee appreciates it.

The joint committee went into private session at 3.45 p.m. and adjourned at 3.50 p.m. until 3 p.m. on Tuesday, 27 February 2007.